The mammalian lung and the Drosophila tracheal system are both composed of a branching network of epithelial tubules, and their development is regulated by closely related growth factors and receptors. Sprouty, a novel inhibitor of tracheal branching in Drosophila, was recently discovered by Hacohen et al. (Cell 92:253-263, 1998). Sprouty is a plasma membrane-associated protein that inhibits both FGFR signaling and tracheal branching, and up-regulates Sprouty expression. Recent work from our laboratory has identified two rat Sprouty homologs, Sprouty-1 and Sprouty-2, that are expressed both in fetal and adult lung and have significant homology with the Drosophila Sprouty and with human Sprouty homologs. Both Sprouty-1 and -2 are expressed in adult alveolar epithelial type II cells, which serve important function in neonatal survival by synthesizing and secreting pulmonary surfactant and in the adult for epithelialization after lung injury. Abundant evidence indicates that the FGFR (in particular the KGF receptor) signaling pathway is also important to the lung, both in branching morphogenesis and subsequent development of the lung. Similar to the findings from studies of Drosophila, a relationship between Sprouty and the FGFR pathway has also been established in the lung; FGF-10 and KGF, both ligands of the KGF receptor (KGFR), up-regulate Sprouty-1 and -2 expression in explant cultures of embryonic rat lung. The discovery of potential regulators of KGFR signaling in the lung is exciting and warrants further studies. The overall goal of this proposal is to elucidate the roles of Sprouty homologs in lung branching, growth, and differentiation. The Specific Aims will determine 1) The structural determinants of Sprouty association with membranes; 2) The mechanism of Sprouty Inhibition of KGFR signaling; 3) The role of Sprouty in lung development.